It’s been a nail-biting few months in the property market, that’s for sure. Covid-19 has created a lot of uncertainty and some pretty scary newspaper headlines.
Knowing where we are in the overall cycle is crucial when deciding to buy a property, as cities and regions perform differently at different stages. Therefore, it’s important to understand what is happening on a microeconomic level.
Economic cycles aside, I have listed 5 useful factors to consider, as they can also dictate your overall success.
1. Your financial position
It’s not impossible, but it’s hard to buy property without access to funds. Having a steady income and savings in the bank will bring you a lot more options. Also, a good credit score and no large debts will help a great deal. The best time to buy a property is when you can afford it.
2. The month of the year
You can also use the month of the year as a guide for the best time to buy a property. Estate agent data show prices are generally lower towards the end of the year. Usually, it’s because sellers marketing a property in December may need to sell and are more likely open to negotiation. Prices can be up to 7% less than from late February to June which are the U.K.’s busiest months.
3. Interest Rates
If you have good credit and are in a stable financial position, it makes sense to invest in property when interest rates are low. It can make a big difference as they can significantly impact the return you receive from your investment. Due to the current economic climate, rates look set to stay low, which is good news for those looking to enter the market and those that are already servicing mortgages.
4. Available properties on the market
When there are lots of properties on the market, it can be a great time to buy. If sellers need to compete to sell their homes, they are more likely to compromise on the asking price to get it off the market. As mentioned above, you might be able to find a great deal at the end of the year, as owners are more likely to have to sell their homes. However, there tends to be more on the market during the spring and summer months
5. The economy
It’s worth understanding the local economy, in addition to the overall economic cycle. Even if the greater economy is doing well, you still need to know what’s happening in your area. Housing and unemployment figures are important when evaluating an opportunity. When the economy is doing well, employment is high, and buyers are in a stronger position to buy a new home. Levels of construction also play a role. When new construction is robust, there is more availability in the market relieving pressure on house prices.
So, is now the right time to buy?
Knowing the right time to invest is just as important as researching the market and knowing which type of property suits your strategy.
There are no set rules; sticking to solid fundamentals like proper research, due-diligence and realistic financial planning go a long way. Attempting to predict or time the perfect moment will likely result in inaction.
As U.S. World War II General George Patton said, “A good plan violently executed now is better than a perfect plan executed tomorrow.” Ultimately, the best time to invest is when it is right for you and you can afford it.
If you would like to learn more about property investment strategies and how to best time the market,
Contact us here.
Article by: Rory van den Berg